Shanghai Automotive Industry Corporation's case for a joint venture with MG Rover will be put to the Chinese Government in the next few days.

The move was revealed yesterday as Chancellor Gordon Brown, who is on a threeday visit to China, again stated the British Government's support for the life-saving deal.

If the joint venture gets the approval of Beijing then Shanghai Automotive (Saic) is expected to pump more than £1 billion into developing a new range of cars, to be built both at Longbridge and in China, in exchange for MG Rover ' s technological know-how.

It is also believed that the British Government is set to offer loss-making MG Rover a tax break to help it to survive a cash crunch until Saic's money begins to flow into Longbridge, where 6,500 people are employed.

This is expected to take the form of a year-long deferral of the company's VAT bill, thought to be in the region of £50 million.

Speaking in China yesterday, Mr Brown said: "We have said to the companies and to the Chinese government we will do what we can in making this partnership successful.

"Both the Chinese and British governments will do what they can. In Britain's case, we are very supportive of this partnership.

"The talks are designed to safeguard and maintain a large number of British jobs in the industry."

Saic said the talks continued to make good progress and that it expected to submit a business plan for the alliance to the Chinese government within days.

"The submission of the feasibility study to the Chinese government will represent part of this ongoing process," a spokesman said.

MG Rover said: "We are making very good progress. Talks are well advanced."

Meanwhile former Rover chairman Sir Graham Day said it was ironic that the last independent British volume carmaker was set to link up with a Far Eastern company following the scrapping of its previous partnership with Honda in 1994.

Sir Graham was instrumental in forging a technical collaboration with Honda in the late 1980s. That ended when Rover's then owner, British Aerospace, sold the business to BMW.

In a radio interview Sir Graham said he believed the joint venture with Honda, could have grown and matured further.

It was "absolutely good for Rover and it was also good for Honda".

Sir Graham said Honda had brought "superb engineering skills" to the partnership with Rover and added: "No disrepect to Shanghai Automotive but they are not Honda."

Asked whether the opportunity to turn Rover into a profitable, modern car manufacturer was lost when the links with Honda were broken, Sir Graham said: "Perhaps when the Honda relationship ended the opportunity to create a substantially owned-in-Britain successful automobile business probably was doomed to come to an end." john_cranage@mrn.co.uk